December 2, 1998
Richard Howdeshell, President/CEO
Fort Worth Federal Credit Union
819 Taylor Street, Room 7A23
Fort Worth, Texas 76102
Dear Mr. Howdeshell:
You have asked whether a federal credit union
(FCU) may have different subscription requirements for new members
based on whether the new member is receiving a loan at the time
the member joins. FCUs cannot create separate classes of members
with different subscription requirements and different rights
to obtain services where there is no rational basis for doing
so. The membership policies you propose, as described below,
are impermissible.
Specifically, you have asked whether FCUs may
permit members, who obtain automobile loans as part of an indirect
lending program, to join the FCU and open a share account with
an initial subscription of $5, while requiring other new members,
who are not part of the indirect lending program, to make an initial
subscription of $25. New members who join with an initial subscription
of $25 cannot obtain any other services until they have $100 in
a regular share account, which is the FCU's par value for a share.
Thus, not only are members who are not part of an indirect lending
program required to pay more to join the FCU, but they are ineligible
for lending services until they have paid the par value of one
share.
The FCU Act provides that persons may be elected
to membership upon the subscription to at least one share of the
credit union and the payment of the initial installment thereon.
12 U.S.C. §1759. Article III of the FCU Bylaws provides
for an FCU's board of directors to establish the par value of
a share, permissible installment amounts, and a time period in
which a member must complete payment of at least one share. These
provisions contemplate that the same subscription requirements
will apply to all persons elected to membership. In addition,
we note that, while FCUs may adopt policies that limit services
to members, such as lending, if there is a rational basis, the
above-described policies withhold lending services from members
who are not part of an indirect lending program without a determination
as to their creditworthiness. Thus, the policy lacks a rational
basis for the disparate treatment.
You have also asked whether an FCU could amend
its bylaws to provide for this disparity in treatment. No, for
the reasons discussed above, a non-standard bylaw amendment to
implement such a policy would be impermissible.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/FSK/SAA:bhs
SSIC 3701
98-0713